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Bill Steinman
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Mona Caroline Chammas: Leniency programs proliferate. For better or worse?

Leniency programs (a.k.a. amnesty programs and deferred prosecution agreements) have so far proven the most successful and effective enforcement strategy tool, leading to its widespread adoption worldwide.

At the same time, the business community and competition authorities increasingly face a number of critical challenges to ensuring the continued incentivization and effectiveness of leniency programs.

Antitrust v. other white-collar crimes. Corporate wrongdoing can, in practice, trigger various legal qualifications and realms of enforcement, e.g. antitrust, corruption and fraud. The Petrobras, Odebrecht, LIBOR and FOREX scandals are telling examples. In other instances, collusion may qualify simultaneously as a cartel falling under administrative competition enforcement and as a conspiracy falling under criminal prosecution. Leniency in competition policy includes both self-incrimination and blowing the whistle against other wrongdoers.

Anti-fraud and anti-corruption policies, by contrast, tend to distinguish between self-reporting and whistleblowing procedures. Could or should competition leniency evidence be used for non-antitrust wrongdoing? Shall leniency evidence carve out self-incrimination? What level of cooperation is desirable, even within the same jurisdiction, among e.g. the competition authority, anti-fraud office and public prosecutor?

Some jurisdictions address the challenge through statutory law (e.g. Brazil), others through litigation before the Supreme Court (e.g. Chile), or through de facto non-referral (e.g. France). Leniency in the wider corporate crime and compliance context calls both businesses and governments for a holistic risk assessment and for consistent detection and enforcement strategies.

Proliferation, cooperation and discontent in public enforcement. Leniency programs under competition law are in place in more than sixty jurisdictions to date, ranging from the United States, to the European Union, Brazil, Mexico and Japan, among others. Leniency program proliferation raises opportunities for international cooperation and for levelling the global playing field. In the context of international cartels, however, undertakings face challenges due to differences across leniency jurisdictions and the absence of a mutual recognition or one-stop shop mechanism (similar concerns arise in multi-jurisdictional merger control).

Non-harmonized proliferation of leniency programs therefore prompts (i) companies to re-assess the risks, pros and cons of applying for leniency, and (ii) governments to pursue efforts towards enhanced cooperation and consistency in cartel detection, e.g. through the OECD, ICN, UNCTAD and regional networks.

Progress towards coordination and/or harmonization is all the more urgent as business, hence cartel risk, is increasingly driven by e-commerce, big data, algorithms and the blockchain, that is multi- or meta-jurisdictional factors.  

Public v. private competition law enforcement. Public enforcement refers to action by public competition authorities, leading to public sanctions upon undertakings and/or individuals, including fines, disqualification and/or jail time. Private enforcement refers to litigation by cartel victims (e.g. consumers charged a cartel-induced price premium) seeking compensation in court, often in the form of follow-on damages.

Private compensation or restitution is, in a few jurisdictions (e.g. the United States), a condition for leniency in public enforcement — in practice, it remains rare and governments are reflecting on how to promote private action further.

While both public and private enforcement are essential and complementary in fighting cartels and rendering justice, potential private actions may also disincentivize undertakings to disclose a cartel and self-incriminate in the first place. The 2014 EU Damage Directive opens solution paths pertaining to liability and evidence limitations. At national and international levels, striking the balance between fair treatment of leniency applicants and promoting victim compensation proves a delicate endeavor calling for cautious legal strategy.

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These challenges highlight two major transversal trends. On the business side: the compliance & ethics revolution. On the enforcement side: testing new detection methods.

The compliance revolution builds on cross-field synergies in preventing, detecting and remedying corporate misconduct. There is no successful business absent a coherent, multi-disciplinary and collaborative risk management strategy. Tools used in antitrust may prove useful in anti-bribery; data protection rules may prove challenging to anti-fraud principles. Complexity calls for dialogue and breaking silos created by over-specialization.

While fully supporting the relevance and effectiveness of leniency programs, competition authorities are exploring additional detection tools, less dependent on cartelists’ decision to come forward. New tools include e.g. ex officio market screening, big data analytics, e-discovery and algorithmic radars. The LIBOR-FOREX scandals were detected that way.

As the competition community is exploring how competition laws apply to algorithms, modern LegTech solutions shall further support the detection of anticompetitive conduct, among other corporate wrongdoings.

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Mona Caroline Chammas, pictured above, is an international attorney and integrity director advising businesses and governments worldwide through GOVERN&LAW, the firm she founded. She is a ‘30 Competition Women’ laureate, a certified D.P.O., a board member of the Altius Society at Oxford and the co-founder of the Sorbonne Compliance program in Paris. She holds law degrees from Columbia University as a Fulbright scholar, and from Louvain and Ghent Law Schools. She is a member of the bar in New York and Brussels. She can be contacted here.

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